Navigating Uncharted Waters: A roadmap to responsible innovation with AI in financial services
As previously explored by the Future of AI in Financial Services research at the World Economic Forum, artificial intelligence is fundamentally changing the physics of financial services. It will undoubtedly become a dominant force in the industry, opening the door to entirely new operating models and ushering in a new set of competitive dynamics.
As previously explored by the Future of AI in Financial Services research at the World Economic Forum, artificial intelligence is fundamentally changing the physics of financial services. It will undoubtedly become a dominant force in the industry, opening the door to entirely new operating models and ushering in a new set of competitive dynamics.
However, seeking to capture the ‘AI advantage’ has brought financial institutions, regulators and policy-makers to uncharted waters, exposing the financial system to new hazards and posing uncertainties to AI adoption. Navigating these waters safely is critical to unlocking the promise of AI to build a better financial ecosystem for all.
This report explores the five key areas of concern raised over hundreds of research interviews with financial services leaders and regulators conducted over the past two years. Specifically:
- Explainability: How does business context shape what we need to know about our AI, and how AI systems make their decisions?
- Systemic risk: Could algorithms destabilize the financial system by introducing new dynamics to how markets and their component actors (i.e., humans and machines) interact?
- Bias and fairness: How can institutions work to ensure their systems do not discriminate against a specific group?
- Fiduciary duty: Can AI systems plausibly fulfill the fiduciary responsibilities of advisors to always act in the best interest of their clients?
- Algorithmic collusion: Can AI systems autonomously learn to engage in anti-competitive behaviour, and how can this risk be mitigated?
The report outlines responses to these questions, exploring the root causes that drive each concern, and how they can be addressed through new governance and oversight frameworks. Ultimately, the report seeks to map out how the financial system can reap the benefits of AI while effectively navigating the risks it introduces, leading to improved outcomes for customers, regulators, institutions, and societies at large.
This report is the capstone publication produced in 2019 by the World Economic Forum's "Future of Financial Services" team. It includes 250+ contributions from subject matter experts over 10+ months of research and several global workshops. It is the longer of two papers, the other being The Next Generation of Data-Sharing in Financial Services, released as part of this research effort in 2019. Both reports were created in collaboration with Deloitte.